The Central Bank of Cyprus (CBC) has confirmed that domestic banks maintained strong capital buffers and elevated liquidity levels throughout 2024, according to revised key indicators of the financial soundness of the Cypriot banking sector released on Monday.

The CBC reports that credit institutions in Cyprus continued to uphold a solid capital base in 2024. At the end of the year:

• The Common Equity Tier 1 (CET1) ratio stood at 24.48%

• The Tier 1 capital ratio reached 25.7%

• The leverage ratio was recorded at 9.47%

These figures represent a notable improvement over 2023, reflecting the stability and resilience of the banking sector, according to the CBC.

Asset quality also showed signs of improvement. However, the volume of non-performing loans (NPLs) remaining on bank balance sheets remains a concern. By the end of 2024, the NPL ratio stood at 6.23%, well above the EU average of around 2.5%.

Nevertheless, the CBC highlighted the high NPL coverage ratio of 58.3%, which demonstrates the sector’s ability to absorb potential future credit losses.

Cypriot banks recorded positive profitability in 2024, largely driven by net interest income. This revenue came from various sources, including:

• Loans and advances

• Investments in debt securities

• Deposits with the European Central Bank (ECB)

While operating expenses remained below historical averages, a slight increase compared to 2023 was observed—primarily due to rising staff costs.

Liquidity in the banking sector remains ample, with liquidity coverage ratios (LCRs) at 333%, far above the minimum regulatory threshold of 100%.

The CBC noted that bank assets were primarily composed of:

• Cash and ECB deposits

• Loans and advances

• Bond holdings

Meanwhile, bank liabilities were mainly made up of:

• Customer deposits

• Capital and reserves

These indicators, the CBC stated, are essential tools for monitoring the resilience of the financial system and maintaining financial stability, as well as for shaping macroprudential policy.